May 6, 2016

The Oregon Legislature passed a bill in
February that requires public utility companies to phase out coal from
their energy portfolios by 2030.

But what does this mean for your electric bill? The
short answer: It depends.

The sweeping, first-of-its-kind law, signed by
Gov. Kate Brown last month, also mandates that at least half the
electricity sold to Oregonians is generated from renewable sources by
2040.

Proponents of the law, called the The Clean
Energy and Coal Transition Act, testified to the Legislature
that rate increases would be negligible, because the coal plants serving
Oregon would require $2 billion in retrofits in the next 15 years —
leading to inevitable rate increases. But some Republican state lawmakers
criticized the law, saying it will increase rates more than if coal was
kept in Oregon's energy portfolio.

How your bill could change

How your electric bill will change depends on who your
provider is.

For now, the law only affects customers of
investor-owned Portland General Electric and Pacific Power. If a public
utility district expands its service area, then it will have to abide by the
renewable energy mandates.

How your bill will be affected also depends on if
current federal tax credits for alternative energy remain in place. Those
credits keep alternative energy investments cost-competitive for utilities.

Electric bills will also be affected by a potential
carbon trading system, future costs of natural gas and the costs borne
by utilities for building renewable power resources like wind
and solar farms.

Utilities are projecting an electric bill
increase of around 1.5 percent each year, said PGE spokesman Steve
Corson.

He added that the cost estimates are "very
general" and subject to change. Corson said rates might stay flat or
go down if costs for the utilities are lower than projected.

An analysis of the law from Flink Energy
Consulting said the average annual change for PGE and Pacific Power
customers will range from a 0.9 percent cost increase to a 2.2 percent
decrease, depending on the federal tax credits and carbon trading system.

Pacific Power spokesman Ry Schwark said the utility
projects price increases around 1 percent per year.

Uncertain costs

Bob Jenks, executive director of the Citizen's Utility Board, said he believes the
projections overestimate the cost of moving to renewables.

Jenks added that CUB, a nonprofit which represents the
interests of ratepayers, wouldn't be supporting the law if
it didn't believe it was the best option for customers.

There's also another safeguard for ratepayers built into the
law. Rates can only increase a maximum of 4 percent each year.
If utilities expect to raise rates more than 4 percent, they can go
back to using nonrenewable power sources until the cost of
implementing renewables goes down.

Some Republican lawmakers criticized the bill during the
2016 legislative session. Many said rates could rise as much as 40 percent
by the time the bill is fully implemented.

Sen. Brian Boquist, R-Dallas, called the law
"radical." Sen. Jeff Kruse, R-Roseburg, called it a "sweetheart
deal" for PGE and Pacific Power.

Corson said a 1.5 percent annual increase would end
up "pretty close" to the 40 percent figure, but added, "You
can’t say that that’s wrong over that 24 year (implementation) period, but it’s
a very narrow view."

Jenks said the 40 percent figure "really came from bad
mathematics."

Schwark added: "If someone can tell me how much
prices will rise over the next 25 years they’re going to win the Nobel Prize in
economics."

The "moving parts" in the cost analysis make it
impossible to predict with certainty how rates will change, he said.